Applied Materials (AMAT) Stock Forecast & Price Target

Applied Materials is expected to benefit from a modest increase in operating expenses, projected to grow approximately 3% year-over-year, following a prior 5% growth due to successful workforce reductions. The company reported a quarter-over-quarter decrease in systems sales to $4.770 billion, which still represented a notable outperformance against restrictions, backed by strong demand in DRAM, NAND, and record sales in the foundry segment. Positive indicators for continued growth in 2026, increased customer demand visibility, and solid margins further support a favorable outlook for Applied Materials, reinforcing its position as a leading supplier in the semiconductor wafer fabrication equipment industry.

Applied Materials is facing significant challenges, highlighted by a 7% sequential decline in revenue attributed to weakening demand in the foundry/logic and NAND sectors, despite some strength in DRAM. The company's restructuring efforts, potentially leading to lower margins and cash flow, alongside heightened risks from supply chain issues and global semiconductor demand, present a concerning outlook. Additionally, management's comments regarding a potentially disappointing outlook for fiscal year 2026 could prompt downward revisions of analyst estimates, further fueling negative sentiment around the stock.